Altria Group Inc.’s (MO) third-quarter earnings rose 28% as the tobacco giant benefited from higher prices for its cigarettes and as sales in its smokeless tobacco unit climbed. The results beat analysts’ expectations. Altria, the maker of Marlboro cigarettes and Copenhagen smokeless tobacco, has in recent years offset falling cigarette volumes with higher prices. The U.S. cigarette industry has been hurt by bans on smoking in public places and higher taxes. But Altria has also benefited from growing demand for smokeless tobacco products. Highlighting the growing importance of smokeless products, Altria executives on a conference call said they are working with retailers to get better and increased displays for smokeless tobacco brands on retail shelves. Some of the added displays for smokeless will come from space previously taken by cigarette racks, the company said. Altria described the changes as a “reallocation of space” between cigarettes and smokeless products that comes in response to the changing dynamics of the U.S. tobacco industry. The U.S. smokeless tobacco industry has grown, aided partly by bans on smoking in public places. In the company’s UST smokeless division, earnings increased 65%, mostly owing to 16% growth in volume led by its Copenhagen brand, as revenue rose 11%. Its smokeless-tobacco market share rose 1.9 percentage points from a year ago to 55.6%. The parent company of Philip Morris USA reported a profit of $1.13 billion, or 54 cents a share, up from $882 million, or 42 cents a share, a year earlier, which included 6 cents in write-downs and other charges. Revenue increased 1.6% to $6.4 billion and rose 3.3% excluding excise taxes to $4.5 billion, as higher prices more than offset lower volume. Analysts polled by Thomson Reuters most recently forecast earnings of 52 cents on revenue of $4.42 billion. Cigarette earnings grew 15%, while revenue increased 1.8% despite a 2.4% volume drop. Retail market share fell 0.1 percentage point to 49.6%, though Marlboro’s share rose 0.7 point to 42.6%. Earnings in the company’s wine business were flat at $12 million and total cigar volumes were down 0.8%. The company raised its 2010 full-year guidance from a range of $1.81 to $1.85 a share to a range of $1.83 to $1.87, reflecting tax benefits. On an adjusted basis the company reaffirmed its guidance. Altria shares, which are up 27% for the year, recently added 0.5% to $24.87.
Source: Dow Jones Newswires;